6 Journal Entries; T-Accounts; Financial Statements Froya Fabrikker A/S Bergen,

Question

6 Journal Entries; T-Accounts; Financial Statements Froya Fabrikker A/S Bergen, manufacturing was based on a cost formula that estimated $360,00 ment orormul taboron As of Bergen, Norway, is a small company that manufactures specialty heavy use in North Sea oill fields. The company uses a job-order costing system and applies e overhead cost to jobs on the basis of direct labor-hours. Its predetermined overhead rate of manufacturing overhead for an estimated of 900 direct labor-hours. The following transactions took place during the year (all allocation purchases and services were acquired on account) A. Raw w materials were purchased for use in production, $200,000. Raw materials were Utility bills were related to selling and administrative activities). Salary and wage costs were incurred: requisitioned for use in production (all direct materials), $185,000. incurred, $70,000 (90% related to factory operations, and the remainder C. D. Direct labor (975 hours) .. Indirect labor $90,000 $110,000 Selling and administrative salarles E. Maintenance costs were incurred in the factory, $54 F. Advertising costs were incurred, $136,000. G. ,000 Depreciation was recorded for the year, S95000 (80% related to factory equipment and the remainder related to selling and administrative equipment). H. Rental cost incurred on buildings, $120,000 (85% related to factory operations, and the remainder related to selling and administrative facilities). : Manufacturing overhead cost was applied to jobs, $? J. Cost of goods manufactured for the year, $770,000. K. Sales for the year (all on account) totaled $1,200,000. These goods cost $800,000 according to their job cost sheets The balances in the inventory accounts at the beginning of the year were: $30,000 Raw Materials $60,000 Post to T-accounts. (Don't forget to enter the beginning inventory balances above.) Determine the ending balances in the inventory accounts and in the Manufacturing Overhead account. 1. 2. Prepare a schedule of cost of goods manufactured. 3. Prepare a jo urnal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. Prepare a schedule of cost of goods sold.

Explanation / Answer

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Note: This transaction has not been posted to the T-accounts since not required by the question.

Accounts Receivable Sales Debit Credit Debit Credit K(1) 1200000 K(1) 1200000 Bal. 1200000 Bal. 1200000 Raw Materials Cost of Goods Sold Debit Credit Debit Credit Bal. 30000 K(2) 800000 A. 200000 B. 185000 Bal. 45000 Bal. 800000 Work in Process Manufacturing Overhead Debit Credit Debit Credit Bal. 21000 Bal. 0 B. 185000 J. 770000 C. 63000 I. 390000 D. 230000 D. 90000 I. 390000 E. 54000 Bal. 56000 G. 76000 H. 102000 Bal. 5000 Finished Goods Advertising Expense Debit Credit Debit Credit Bal. 60000 F. 136000 J. 770000 K(2) 800000 Bal. 30000 Bal. 136000 Accumulated Depreciation Utilities Expense Debit Credit Debit Credit G. 95000 C. 7000 Bal. 95000 Bal. 7000 Accounts Payable Salaries Expense Debit Credit Debit Credit A. 200000 D. 110000 C. 70000 Bal. 110000 E. 54000 F. 136000 Depreciation Expense H. 120000 Debit Credit Bal. 580000 G. 19000 Bal. 19000 Salaries Payable Rent Expense Debit Credit Debit Credit D. 430000 H. 18000 Bal. 430000 Bal. 18000

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